China’s ongoing campaign to reduce global reliance on the U.S. dollar has encountered a notable setback following Saudi Arabia’s withdrawal from the mBridge digital payment initiative. According to reports from the Financial Times, the major Middle Eastern oil exporter quietly stepped back from the experimental blockchain platform, which Beijing has championed as a potential alternative to the established, dollar-dominated SWIFT system.
Launched initially in 2021, the mBridge project was developed to allow central banks to conduct transactions directly using digital currencies powered by blockchain technology. The foundational participants included China, Hong Kong, Thailand, the United Arab Emirates, and the Bank for International Settlements (BIS), often described as the central bank for international central banking operations.
The Saudi Central Bank, also recognized as SAMA, joined the initiative in 2023 under the umbrella of the BIS as an observing member. This involvement supported ongoing research into central bank digital currencies. SAMA subsequently took part in creating a formal proof of concept during 2024. Representatives for the Saudi central bank stated that the proof of concept concluded successfully in May 2025, after which SAMA ceased to be a participating member of mBridge. Additional reporting indicated that the Saudi institution preferred to avoid public association with the platform going forward.
When questioned regarding potential diplomatic pressure from Washington influencing the departure, sources familiar with the matter cautioned against drawing broader inferences. A similar exit occurred when the BIS departed from mBridge in October 2024 amid reports of American lobbying. At that time, the BIS stated that it had naturally graduated out of the framework and disputed claims of political motivations.
Saudi Arabia’s initial inclusion was widely regarded as a significant achievement for Beijing’s payment scheme. As a dominant oil-producing nation, Riyadh serves as the cornerstone of the historical petrodollar system established in 1974. Under that arrangement, the kingdom agreed to price its petroleum exports in U.S. dollars while channeling financial surpluses into American assets. This dominance eventually expanded into broader global commerce, establishing the greenback as the currency utilized in approximately 90% of all international transactions.
Because petroleum remains a foundational input for global manufacturing, transport, and petrochemical supply chains, markets maintain a continuous incentive to operate in dollars. Deutsche Bank noted in market commentary that global economies largely save in U.S. dollars because international trade is predominantly invoiced in the currency, cementing its cross-border prominence on the foundation of the petrodollar.
Nevertheless, the greenback has experienced mounting pressure from alternative financial networks. Following sweeping U.S. sanctions that effectively cut Russia off from dollar-based systems after its 2022 invasion of Ukraine, numerous nations accelerated efforts to reduce their exposure to dollar-denominated assets. Central banks worldwide have increasingly accumulated physical gold reserves while trimming their holdings of U.S. Treasuries. Furthermore, Saudi Arabia has occasionally explored pricing select petroleum shipments to China in yuan, while nations like Russia and Iran utilize Chinese currency channels to bypass western restrictions.
Financial analysts suggest that ongoing regional conflicts could introduce additional friction into traditional currency flows. Deutsche Bank researchers warned that geopolitical instability in energy corridors might eventually test existing security frameworks for Gulf infrastructure, potentially encouraging wider adoption of alternative regional settlement methods.
Despite the departures of Saudi Arabia and the BIS, Beijing has continued to pursue currency swap agreements with international central partners while promoting yuan-denominated settlements. Data compiled by the Atlantic Council indicates that transaction volumes on the mBridge platform have expanded substantially since its inception, highlighting the steady, incremental evolution of alternative digital settlement networks even as high-profile members recalibrate their participation.
Source: Fortune
